CSR expects slow earnings recovery

Building materials group CSR has warned of continued tough trading conditions, which may limit any rebound in earnings after a tough year to March when it lost $149.6 million.

The key to any earnings recovery will be stemming the losses in its ill-fated glass division and while the red ink has been stemmed, it will not be until next financial year ending March 2015 that any rebound here will be seen, it told shareholders in its annual report, released Tuesday.

Housing starts in Australia will be around 147,000 for the year to March 2014, up only around 2 per cent on the previous year and reflecting a stabilisation of recent declines in Victoria, offset by growth in NSW and Western Australia.

The value of non-residential construction work done in Australia is expected to remain flat, it said.

"There are some encouraging signs of improvement in housing construction in Australia, with rolling 12 month finance approvals increasing steadily over the last year and modest growth in lead indicators in NSW and Western Australia combined with record low interest rates," it said.

"We expect any recovery to be gradual until consumer and investor confidence improves."

Aluminium division earnings will remain under pressure due to the weak price of the metal, it said.

The Australian dollar "aluminium price would need to increase from current levels by approximately 10 per cent for [Gove Aluminium] to achieve earnings similar to the level achieved last year, assuming no change in current ingot premiums," it said.

Profits from property sales will remain lumpy, but with some contribution expected this financial year, it said.

Longer term, "CSR retains a solid pipeline, underpinned by Chirnside Park to be developed in several stages over the next five years," it said.

The group has "largely completed" its capital expenditure program, it said, "and is now well placed to increase earnings and cash flow as markets recover".